Bank of Japan Intervenes in Forex Market Again After 3 Days? ... Volatile Yen

Yen-Dollar Exchange Rate Falls to 145 Yen Range in Morning Session
Bank of Japan May Intervene in Third Market Operation

[Image source=Yonhap News]

[Asia Economy Reporter Lee Ji-eun] The yen-dollar exchange rate fell by about 4 yen on the morning of the 24th, sparking speculation that the Bank of Japan may have intervened in the foreign exchange market again after three days.

On the 24th, the yen exchange rate in the Tokyo foreign exchange market stood at 148.85 yen per dollar. The yen-dollar exchange rate, which closed last week at 147.79 yen per dollar, rose to as high as 149.70 yen during the morning session before suddenly dropping to the 145 yen level. However, following a series of yen sales by traders, the exchange rate quickly rose again and is currently trading around the 148 yen level.

The Nihon Keizai Shimbun stated, "Given the rapid decline in the yen-dollar exchange rate this morning, it appears that the government and the Bank of Japan intervened by purchasing yen."

Earlier, on the 21st (local time) in the New York foreign exchange market, the yen exchange rate surged to the 151 yen level during the session but turned strong after 11:30 p.m., falling to the 144 yen level over two hours. Major foreign media report that the Japanese government intervened in the foreign exchange market again after a month since the intervention on the 22nd of last month, spending more than 30 billion dollars (approximately 43 trillion won) to purchase yen.

However, Japanese Finance Minister Suzuki Shunichi responded to reporters on the morning of the 24th when asked whether authorities had engaged in a second market intervention, saying, "I will not comment."

Market expectations suggest that the Bank of Japan will continue to intervene in the foreign exchange market going forward. Bank of America stated, "With foreign exchange reserves reaching 1.3 trillion dollars, the Japanese government is estimated to be able to intervene in the market up to about 10 more times by selling liquid assets."

However, experts point out that the effect of the Bank of Japan's intervention on the exchange rate will be limited. This is because the interest rate gap between the U.S. and Japan is not narrowing due to the Bank of Japan's accommodative monetary policy, and the ongoing trade deficit is encouraging yen sales.

Saito Yuji, head of the foreign exchange division at Tokyo Cr?dit Agricole, said, "It will be difficult for the Bank of Japan to suppress the global dollar buying trend through market intervention," but added, "However, it seems it can buy some time."

This content was produced with the assistance of AI translation services.